Rhonda Stephan, as the personal representative of the estate of Bobby Gene Hicks, appealed an order by the trial court granting a motion to compel arbitration that was filed by Millennium Nursing and Rehab Center Inc. Stephan contended that Bobby Hicks, her father, died in 2015 while he was a resident at Millennium Nursing and Rehab Center, which is a skilled-nursing facility owned and operated by Millennium.

While Hicks was hospitalized at Crestwood Medical Center, Stephan signed all of the paperwork arranging for her father to be discharged from the hospital and then transferred to the rehab center at Millennium Nursing. However, she did not hold a power of attorney for healthcare or any other actual legal authority to act on behalf of her dad or to enter into a contract in his name.

Hicks did not sign any of the paperwork. However, he is named as a party to the contracts included within that paperwork.

Hicks presented to a neurology clinic complaining of memory impairment. The examining physician noted that the patient’s dementia caused no more than short-term memory loss. Hicks was seen three more times over the following eight months.

Fourteen months after first seeing the neurologist, Hicks suffered a fall and fractured his left hip and clavicle. He was admitted to the hospital where he underwent surgery to treat the fractures.

During Hicks’s hospitalization, Stephan signed all the paperwork arranging for him to be discharged from the hospital and transferred to the skilled nursing facility. About six weeks after Hicks was admitted to the skilled nursing facility, Millennium Nursing and Rehab Center Inc., the staff found Hicks was unresponsive. He was transferred to the nearby hospital.

Eleven days later he died from septic shock and an associated urinary tract infection. The family filed the medical malpractice and wrongful death claim against Millennium Nursing and Rehab Center Inc.

The issue in the case that went to the Alabama Supreme Court was whether the arbitration provision in the Millennium Nursing and Rehab Center’s contract was binding on Hicks that commanded arbitration. The Supreme Court concluded that Stephan cannot be bound to the arbitration provision in her capacity as personal representative to Hicks’s estate. When she signed the nursing home admission agreement at issue here, she was Hicks’s relative or friend, but otherwise had no legal authority for Hicks.

The Supreme Court found that the estate presented evidence establishing that, at the time of the signing of the agreement, Hicks had no reasonable perception or understanding of the nature and terms of the nursing home’s contract. The Supreme Court specifically referred to the patient’s adult child’s affidavit and the discharge record from the hospital. The court noted that, in addition to suffering from dementia, Hicks was recovering from reconstructive hip surgery after suffering a fall when his adult child, Stephan, signed the transfer paperwork, which included the arbitration agreement.

The Supreme Court reasoned that this case was similar to cases in which the court held arbitration agreements to be non-binding on mentally incompetent residents of nursing homes when those residents were substantially mentally impaired at the time of contracting. The court concluded that, at the time the patient’s adult child signed paperwork for the skilled nursing facility in preparation for the patient’s discharge from the hospital, the patient did not have the capacity to understand the nature and effect of allowing the patient’s adult child to agree to an arbitration agreement.

In addition, the Supreme Court stated that the patient’s adult child, Stephan, did not have apparent authority to execute the arbitration agreement on the patient’s behalf because the patient lacked the capacity to contract at the time the arbitration agreement was signed. The court found that the patient’s adult child signed the arbitration agreement solely as a family member.

The court concluded that Stephan could not be bound to the arbitration agreement in the patient’s adult child’s capacity or as the personal representative of the patient’s estate when the patient’s adult child (Stephan) signed the arbitration agreement in her capacity as the patient’s relative or next friend.

Accordingly, the Supreme Court of Alabama reversed the trial court’s grant of the nursing home’s motion to compel arbitration.

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